From Briefing.com: Weekly Recap - Week ending 31-May-13Dow -208.96 at 15115.57, Nasdaq -35.38 at 3455.91, S&P -23.67 at 1630.74
Sector Performance (% change of the day): Financials (-1.57%), Tech (-0.84%), Health Care (-2.17%), Consumer Staples (-1.80%), Consumer Discretionary (-1.09%), Industrials (-1.00%), Energy (-1.99%), Telecom (-1.42%), Materials (-1.51%), Utilities (-0.59%).
Dow -1.4%, S&P 500 -1.4%, Nasdaq -1%, Nasdaq 100 -1%, S&P 400 -0.9%, Russell 2000 -1%
The major averages ended on their lows as afternoon selling caused the S&P 500 to settle lower by 1.4%.
Equities saw losses in the opening minutes of the session as cautious overseas action kept buyers at bay. Contributing to the overseas softness was chatter questioning the strength of tonight's manufacturing PMI report out of China.
Shortly after the open, the key indices were able to erase most of their early losses in reaction to a pair of better-than-expected economic data points.
The Chicago PMI jumped to its highest level since March 2012 as the May print of 58.7 followed April's contractionary reading of 49.0. The large increase was fueled by an improvement in all of the key subcomponents as employment, order backlogs, production, and new orders all posted notable gains.
Separately, the final reading of the May University of Michigan Consumer Sentiment Survey moved up to 84.5, its best level since July 2007. The Briefing.com consensus expected no change from the preliminary reading of 83.7.
The positive surprises gave a brief boost to equities, but failed to spark a sustained rally as the major averages hovered near yesterday's closing levels until late afternoon selling took hold.
All ten sectors settled in the red as two defensive groups, consumer staples and health care, led to the downside. Most staple components registered losses and Dow member Procter & Gamble (PG 76.80, -2.29) fell 2.9%. Consumer staples endured selling pressure throughout the week as the group declined 3.2%, which erased its May gain.
Elsewhere, the health care sector fell 2.2% and trimmed its year-to-date gain to 20.1%, surrendering its spot atop this year's sector leaderboard to financials.
Financials were mixed in early action until afternoon selling splashed the component list with a wide-ranging shade of red, leaving Morgan Stanley (MS 25.90, +0.08) as the lone advancer. Even with today's 1.6% loss, the financial sector ended the week with a gain of 5.9%.
Technology stocks also enjoyed a strong week, but unlike financials, the group held up relatively well through the selloff. The relative strength of major components like Apple (AAPL 449.74, -1.84), IBM (IBM 208.02, -1.34), and Intel (INTC 24.28, +0.07) overshadowed the weakness in biotechnology and chipmakers. The iShares Nasdaq Biotechnology ETF (IBB 179.50, -3.73) fell 2.0% while the PHLX Semiconductor Index shed 1.2%.
Today's afternoon selling caused the CBOE Volatility Index (VIX 16.25, +1.72) to jump to its highest level since April 19 as market participants raised their near-term volatility expectations.
Looking at today's remaining economic data reveals a disappointment in the Personal Income and Spending report for April. Income was flat and spending declined 0.2% while the Briefing.com consensus expected both measures to be up 0.1%. Core PCE was also flat compared to a 0.1% increase in March.
Personal income for March was revised up to 0.3% from 0.2% while spending was revised down to 0.1% from 0.2%.
On Monday, April construction spending and the May ISM Index will be released at 10:00 ET while auto and truck makers will be reporting their May sales throughout the day.
Week in Review: Choppy Week Leaves S&P in the Red
On Monday, equity and bond markets were closed in observance of Memorial Day.
Tuesday ended with solid gains for the major indices as the Dow Jones Industrial Average logged its 20th consecutive advance on a Tuesday. The early action saw nine of ten sectors register gains of at least 1.0%. However, the defensively-geared utilities spent the entire day in negative territory before ending lower by 1.2%. A Deutsche Bank downgrade of Exelon (EXC 31.34, -0.16) weighed on the rate-sensitive sector, which extended its May loss to 7.8%. The health care space was able to outperform other counter-cyclical groups as biotechnology displayed strength. The iShares Nasdaq Biotechnology ETF settled higher by 1.3%.
Wednesday saw the major averages settle with modest losses as the S&P 500 shed 0.7%. Equities slipped out of the gate as sellers drove the major averages to their lows 90 minutes into the session. This marked the return of bargain hunters, who helped the S&P return to its opening levels. However, the relative weakness of several influential groups like energy and health care kept the benchmark average from regaining its flat line.
On Thursday, stocks settled with modest gains as late afternoon selling knocked the major averages from their highs following a headline from Nikkei news, indicating Japan plans to impose new foreign exchange margin trading rules. The news caused dollar/yen to slip into the red while also weighing on equities. Most major financials saw gains of at least 1.0% as Morgan Stanley climbed 3.4% to outperform its peers. Meanwhile, the broader financial sector rose 1.1% to extend its May gain to 7.6%. ..NYSE Adv/Dec 464/2596.
Best and worst performing S&P 500 industry groups for the week:
Industry Groups Gain Components
Gold +7.22% NEM
Automobile Manufacturers +6.02% F
Health Care Facilities +5.53% THC
Computer & Electronics Retail +4.91% BBY, GME, RSH
Tires & Rubber +4.05% GT
Investment Banking & Brokerage +3.51% ETFC, GS, MS, SCHW
Life & Health Insurance +3.51% AFL, LNC, MET, PFG, PRU, TMK, UNM
Semiconductor Equipment +3.43% AMAT, KLAC, NVLS, TER, WFR
Computer Storage & Peripherals +3.13% EMC, LXK, NTAP, QLGC, SNDK, WDC
Other Diversified Financial Services +2.50% BAC, C, JPM
Industry Groups Decline Components
Homebuilding -6.13% DHI, LEN, PHM
Household Products -6.07% CL, CLX, KMB, PG
Integrated Telecommunication Services -5.39% CTL, FTR, Q, T, VZ, WIN
Office REITs -5.21% BXP
Residential REITs -5.20% AIV, AVB, EQR
Diversified REITs -5.13% VNO
Industrial REITs -5.08% PLD
Building Products -5.06% MAS
Independent Power Producers & Energy Traders -4.93% AES, CEG, NRG
Agricultural Products -4.87% ADM
Index Started Week Ended Week Change % Change YTD %
DJIA 15303.10 15115.57 -187.53 -1.2 15.3
Nasdaq 3459.14 3455.91 -3.23 -0.1 14.5
S&P 500 1649.60 1630.74 -18.86 -1.1 14.3
Russell 2000 984.28 984.15 -0.13 -0.0 15.9
Power Integrations (POWI) introduced HiperPFS-2, a new family of high-efficiency, active-PFC ICs for offline applications from 100 W to 380 W.
Analyst comments: MLNX -3.1% ( downgraded to Neutral from Buy at UBS)
8:03AM Seagate Tech Announces Early Tender Offer Results and Amends Cash Tender Offer for Outstanding 7.75% Senior Notes Due 2018 and 6.80% Senior Notes Due 2016 (STX) 43.67 : Co announced the early tender results of the cash tender offer announced by its wholly owned subsidiary, Seagate HDD Cayman, on May 16, 2013 to purchase the outstanding 7.75% Senior Notes due 2018 and 6.800% Senior Notes due 2016. As of the previously announced early tender date at 5:00 p.m., New York City time, on May 30, 2013, HDD Cayman had received tenders for an aggregate principal amount of approximately $398 million of the 2018 Notes and an aggregate principal amount of approximately $190 million of the 2016 Notes.
HDD Cayman also announced today that it has increased the aggregate principal amount of notes that it has offered to purchase in the Tender Offer from $250 million to $700 million. In addition, HDD Cayman has announced that it has extended the period during which notes validly tendered are eligible to receive the Early Tender Premium from the previously announced early tender date of May 30, 2013 until June 13, 2013. The Tender Offer will expire at 11:59 p.m., New York City time, on June 13, 2013, unless extended or earlier terminated by HDD Cayman.
07:41 am Omnvision shares soar 22% following better than expected earnings
OmniVision (OVTI $18.90 +3.41) reported fourth quarter earnings of $0.31 per share, excluding non-recurring items, $0.10 better than the Capital IQ consensus of $0.21, while revenues rose 53.9% year/year to $336.2 million versus the $319.02 million consensus. GAAP gross margin for the fourth quarter of fiscal 2013 was 17.5%, as compared to 16.9% for the third quarter of fiscal 2013 and 22.5% for the fourth quarter of fiscal 2012. The sequential increase in fourth quarter gross margin reflected a favorable change in product mix, partially offset by the unfavorable impacts from a decrease in revenues recorded on the sale of previously written-down inventory and an increase in allowance for excess and obsolete inventories. Co issues upside guidance for Q1, sees EPS of $0.35-0.52, excluding non-recurring items, versus the $0.28 Capital IQ Consensus; sees Q1 revs of $355-390 million versus $342.77 million consensus.
Dell (DELL) announced that it has filed definitive proxy materials with the SEC in connection with a Special Meeting to be held on July 18, 2013 to approve a transaction under which Michael Dell, the co's Founder, Chairman and CEO, in partnership with global technology investment firm Silver Lake, will acquire the co for $13.65 per share in cash. The price represents a premium of ~ 37% over the average closing share price during the 90 calendar days ending Jan 11, 2013, the day prior to when rumors regarding the transaction entered the marketplace. The Special Committee of the Board of Directors has also issued an open letter to shareholders recommending that shareholders vote to approve the transaction and outlining the reasons for the recommendation. Letter states "Our analysis led us to conclude unanimously that a sale to the Michael Dell/Silver Lake group for $13.65 per share is the best alternative available -- in a challenging business environment it offers certainty and a very material premium over pre-announcement trading prices. It also shifts very substantial risks to the buying group -- risks that in any leveraged recapitalization would be retained by the stockholders and considerably magnified by leverage and the public nature of the resulting stub."
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